June 6, 2012

RED ALERT:

Walker won by a bigger margin than he did in 2010, and with more overall votes. He carried 38 percent of union households - a slight improvement from his 2010 midterm tally -- a strikingly strong number given how he's been cast as the villain of labor. It's a sign of the cultural divide between national Democrats and blue-collar whites, one that is particularly acute for the president.

Obama's team is taking consolation in the fact that exit polling showed him leading Mitt Romney, 51 to 44 percent. But that's hardly good news: with near-presidential level turnout (and notably higher level of union turnout), Obama is running five points behind his 2008 performance. Replicate that dropoff across the board, and all the key swing states flip to Mitt Romney.

LET EUROPEANS VOTE ON IT AND THEY'D STRIP THOSE "RIGHTS" TOO:

The recall victory of Wisconsin Gov. Scott Walker is sending shockwaves through Europe as right-wing and left-wing newspapers marvel at the Republican's ability to survive an election months after stripping the collective bargaining rights of public-sector unions. In European countries, where a much larger percentage of the labor force is unionized, politicians typically face insurmountable opposition from labor groups during wage and work-hour disputes. Today, some of the continent's biggest paper's are doing a double-take at headlines from over here.

FAHRENHEIT 870:

Men with Lit Matches: a review of Fahrenheit 451, The Fiftieth Anniversary Edition by Ray Bradbury (A. W. R. HAWKINS, The University Bookman)

Montag's seminal moment takes place as he and his fellow firemen are burning down a house that contains books, and the homeowner, rather than leave her books behind, stands among them determined to be burned with them as a witness to their value. Before she burns, she quotes from the English Reformers about whom she'd read: "Play the man, Master Ridley; we shall this day light such a candle, by God's grace, in England, as I trust shall never be put out!"

From that early point onward, Fahrenheit 451 shows Montag on a quest for truth. And he, the destroyer of books, becomes a hoarder of the same, until even his fellow firemen turn on him and burn his house to the ground in their sheer intolerance of learning.

Like so many of Bradbury's works, Fahrenheit 451 is priceless. And it bolsters perfectly the point that Russell Kirk made when he wrote, "Bradbury's stories are not an escape from reality; they are windows looking upon enduring reality."

SLACKERS:

Then: "One former temporary warehouse employee said he worked seven months before he was terminated for not working fast enough. In his 50s, he worked 10 hours a day, four days a week as a picker, plucking items from bins and delivering them to packers who put them in boxes for shipment. He would walk 13 to 15 miles daily, he estimated, and was among the oldest pickers," explains Soper.

Now: "Work in the warehouse is physical, with many employees walking more than 10 miles per shift plucking items from shelves," writes Soper. Though, as we wrote back in March, Amazon acquired a robot company that would make work at Amazon's factory's less mobile and therefore less strenuous. But also less active, which some might see as a downside.

But, overall, workers just sound a lot happier. However, the investment might not have had everything to do with improving employee morale. "Amazon ships a lot of electronics and food now. It's not good to have that stuff in extreme temperatures," Sucharita Mulpuru, an analyst with Forrester Research told Soper. "I would like to think there was an element of humanity to the decision but there's nothing in Amazon's history or in Jeff Bezos' public persona that would lead me to think that was the driver of the decision. ... Rarely has Amazon made any business decisions that didn't affect the bottom line." No matter the motivation, however, Amazon's warehouses have gotten a lot cooler.

WINNING THE WAR ON PUBLIC UNIONS:

On Tuesday, a majority of the voters who for a year and a half have spent the most time weighing those sorts of numbers reaffirmed that they think their Wisconsin governments had grown too elephantine, too expensive.

There's another elephant in the room: Act 10 ended the compulsory collection of union dues by government employers. It turns out that when workers have a free choice of whether to keep paying, many decide that it isn't worth the money. We were surprised last week by a Wall Street Journal report that Wisconsin membership in the American Federation of State, County and Municipal Employees plummeted from 62,818 in March 2011 to 28,745 in February 2012. At the American Federation of Teachers, 6,000 of 17,000 Wisconsin members have walked away.

Drop-offs that stark have implications not only for the unions, but also for politicians who rely on union donations to fund their campaigns.

After Walker's victory, the implication of which we're surest is this: Government spending and taxpayer debt, the issues that spectacularly animated the politics of the 2010 election cycle, will be potent in 2012. Wisconsin is but one reason. Turmoil in European nations that spent and borrowed themselves into disaster will focus Americans on what can happen when public officials spend money they don't have.

DAVID ALWAYS BEATS GOLIATH:

Big Banks Are Not the Future: As leading financial firms face market and regulatory challenges, the likelihood of their managers responding deftly seems slim at best. (HENRY KAUFMAN, 6/05/12, WSJ)

The power of leading financial conglomerates is being narrowed in other ways. Their inventiveness in introducing new financial products and marshaling new technology allowed them to outrun regulators for decades. The gap is now narrowing. Even though supervisory authorities initially were slow to perceive the implications of securitization and to respond appropriately to the rapid growth of derivatives, the landscape is much clearer now. In the wake of the 2008 crisis, neither regulators nor investors see these innovations as reliable ways to diversify risk. Large financial institutions will need to work hard to develop new techniques for expanding credit that are acceptable to regulators.

Information technology, once the handmaiden of leading financial conglomerates, now serves regulators. It is not difficult to imagine a day in the near future when credit flow information--data on trades, loans, investments, changes in liabilities, and so on--will flow instantaneously from financial institutions to official regulators.

In the somewhat more distant future, the entire demand deposit function probably could be taken over by governments through a network of computer facilities in "the cloud." Even more likely, within a generation branch banking will become obsolete as the general population (not just early adopters) conducts all its banking on hand-held devices. McDonald's or Starbucks or some other retailing chain will gobble up the bank branches for remodeling.

As leading financial firms have challenges to their dominance from several directions, the likelihood of their managers responding deftly seems slim at best. Change is seldom attractive for incumbents, especially when they enjoy such a predominant position in a major sector of the economy. Rather, shareholders need to push for action.

The most critical measure shareholders should insist on is divestiture. The financial conglomerates need to shed some of their activities and become more focused. That strategy would bring several major benefits, for the firms as well as for our financial markets and our economy. It would reduce their operations to manageable proportions. It would declassify them as "too big to fail." It would lessen the role of government in the marketplace. And, in a win-win dynamic, it would enhance stockholder value significantly. All are reasons not to lament the sunset of the giant financial conglomerates.

JUST CUT STRAIGHT TO THE OPEN BORDERS, NO ONE WILL MIND:

But in his speech, Romney once again did not mention immigration, an issue polls show Hispanic voters care about nearly as much as the economy and one where Romney's views are starkly at odds with many Hispanic voters. One protester waving a sign in opposition to Romney's immigration views was quickly escorted from the event minutes after the presumptive Republican nominee began speaking.

Romney ran hard to the right on immigration during the primary, and has kept silent on the issue since the general-election campaign began -- he also avoided addressing it in a late May speech to the Latino Coalition at the U.S. Chamber of Commerce.

PITY THE POOR FOLKS STILL WAITING FOR PEAK OIL:

Wind turbines are being built right next to oil rigs, bringing an additional rush of jobs and revenue to the small towns along the southern border of the state -- as well as big paychecks to local landowners.

BP Wind Energy is currently building the biggest wind farm in the state, and it plans to begin production by the end of this year. The project has already brought 500 jobs to the three counties its wind turbines span: Harper, Barber and Kingman, according to BP.

The writhing agony of American automakers has given way to something rather more pleasant: ecstasy. After a dismal few years, U.S. car companies are thriving again, turning profits and selling cars. Now, they have an additional bit of encouragement: easier credit.

Experian, the Dublin-based financial services firm, says more applications for auto loans are being approved by banks, auto company finance subsidiaries and credit unions. The confidence of U.S. lenders is being rewarded by fewer delinquencies, suggesting a virtuous cycle that may lead to a further easing of credit.

Government ought not own companies permanently, no matter the profits to be made.